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In Settlement, Nokia Will Pay Royalties to Qualcomm

SAN FRANCISCO — Qualcomm and Nokia said on Wednesday they have settled a patent lawsuit with hundreds of millions of dollars at stake — the resolution coming just hours after the trial in the case was scheduled to start.

The companies did not disclose the terms of the settlement. But they did say they have entered into a 15-year agreement in which Nokia has agreed to pay royalties to license technology developed by Qualcomm that improves phone performance and battery life, and reduces product size.

The two companies had been at odds since April 2007, when the previous licensing agreement between them expired. Nokia, the Finnish cellphone maker, said that it should pay a lower royalty rate than it had been because it controlled important technology with its own patents.

The case over the royalty disputes was scheduled to go to trial on Wednesday morning in Delaware Chancery Court. However, the judge in the case postponed the start of the trial until Thursday.

Also on Wednesday, Qualcomm was scheduled to give its quarterly earnings review to investors, but delayed a conference call with securities analysts until Thursday morning. The company did report its financial results. It said net income for its third fiscal quarter was up 6 percent, to $748 million, from the quarter a year ago, on revenue of $2.8 billion, which was up 19 percent from a year ago. Qualcomm’s shares soared 18.7 percent in after-hours trading to $53.20, up from a $44.82 close in the regular session on Wednesday.

Mark McKechnie, an industry analyst with American Technology Research, said the lawsuit and Nokia’s refusal to pay royalties had been a considerable drag on Qualcomm’s stock. The settlement is, he said, “probably a smart move for Nokia, but a lucrative move for Qualcomm.”

He estimated that the settlement could mean as much as $400 million in royalties paid to Qualcomm next year. He said he derived that by estimating that Nokia could pay a 2 percent royalty fee on the 100 million phones equipped with Qualcomm technology that it is likely to sell next year. (Mr. McKechnie said that a 5 percent royalty arrangement is more typical in the industry.)

“It’s pretty significant. It’s a big win for an American company,” Mr. McKechnie said of Qualcomm, which is based in San Diego.

Mr. McKechnie said that the resolution could also save Qualcomm as much as $200 million a year in legal bills.

Qualcomm declined to comment beyond a joint press release issued by the companies.

As part of the settlement, Nokia said it had agreed to withdraw a complaint it made to the European Commission against Qualcomm and assign ownership of a number of patents to Qualcomm.

“We believe that this agreement is positive for the industry, enabling the market to benefit from innovation and new technologies,” Olli-Pekka Kallasvuo, Nokia’s chief executive, said in a press release.

Mr. McKechnie said Nokia was well served to settle, as it had its hands full battling smartphone competitors, including Apple.

“Nokia is facing increasing competition from smartphone competitors,” he said. “It can’t be messing around with legal battles with Qualcomm when going through massive industry transition.”

A version of this article appears in print on , on page C3 of the New York edition with the headline: In Settlement, Nokia Will Pay Royalties to Qualcomm. Order Reprints|Today's Paper|Subscribe